Skip to main content

tv   Closing Bell  CNBC  January 9, 2013 3:00pm-4:00pm EST

3:00 pm
this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office. but i'm still stubbed up. [ male announcer ] truth is, nyquil doesn't unstuff your nose. what? [ male announcer ] alka-seltzer plus liquid gels speeds relief to your worst cold symptoms plus has a decongestant for your stuffy nose. thanks. that's the cold truth! . today's sign of the times comes to us from israel. there is a new law that bans models who are too skinny. the law requires models to have
3:01 pm
a body mass index or bmi of at least 18.5. okay. and with that we're going to end this show. thanks for watching. hi, everybody. good afternoon. we're into the final stretch. welcome to the "closing bell." i'm maria bartiromo at the new york stock exchange. a bit of green on the screen today after two straight days in the red, scott. >> good to see you again. i'm scott wapner in for bill griffith. on top of these markets plus a whole lot more including the imminent nomination of jack lew as treasury secretary may mean to the debt ceiling fight. we'll previau bank earnings which are about to kick o.those more than anything else could drive the markets in the coming weeks and aig will not join in former chief hank greenberg's lawsuit against the same u.s. taxpayers that bailed the company out. aig ceo bob benmoschy will be here. >> first take a look at the
3:02 pm
markets. what we're seeing is we have the markets higher though it's well off the highs. up 90 points on the dow industrials and we're up 34 points on the dow jones industrial average, 13,363 and the last trade on nasdaq has given up some of the oomph of earlier and the standard & poor's 500 has a similar chart pattern with a gain on the session of just 1.5 point, eking out positive territory. gentlemen, good to see you. thanks so much for spending the time. >> hi, maria. how are you? >> let's talk about this market because you certainly have a fair amount of issues that could seem troubling, and yet we continue to see money finding a home in equities. what do you think is behind that? >> if you look over the last five months, you've had a huge risk-on rally. a lot of economic indicators have turned up. the, revisions news has become less bad, and there's a lot of
3:03 pm
hope associated with stimulus in china. monetary policy in japan, et cetera, and so as a result of this improvement you have seen a lot of optimism and a lot of movements in the stocks. as we look over the next two or three months though, i do expect somewhat of a pullback as i expect earnings season to be somewhat more cautious than investors expect, though the markets should rally beyond the end of the year through that. >> bill, you're managing money so where are you putting it? >> i -- right now i like stocks that i can see visibility, and which is hard, but i think the earnings season is going to be muted because i think people are concerned about the near term so we look at areas where we can see visibility and airline stocks, an area we like for a while. continue to like it. planes are full, fuel costs going down, ancillary charges and raising revenues for those guys so we like that group a lot. healthy living group, we like a lot, supplements and organic food, and actually we're starting to move a little out of software and more into hardware because we do think spend will
3:04 pm
go pick up in 2013 so the telecom equipment, enterprise stocks, i think they will do pretty well in 2013 as well, but i would agree with vadeem over the next few weeks you will see consolidation. you have to be patient. >> what do you see out there on the trading desks of the floor today? are you seeing conviction to the buy side? how do you see things? >> perhaps we'll take a note from a pricely fairly large secondary offering this evening rand a slew of ipos so calendar in syndicate land says these are rich prices arksz good time to raise capital or sell shares and bring our companies public. that's perhaps a leading indicator to where they see the market going, stabilizing here or peeling back a little bit. a lot of volatility in sickle names. you've seen all the names that come out of the mccondo settlements, bp and anadarko both on the horizon after the settlement with transocean and
3:05 pm
herbalife, dan lobe throwing in his support of the company who has an investor day where he basically supports the company and opposes oftentimes a colleague of his on some activist names in mr. ackman, so that poses a lot of volatility or sets the stage for a lot of volatility in a single name. >> jeff, we've seen some money coming out of mutual funds and going into etfs. investors are getting more involved or trying to. is that bearish or bull strategic defense initiative. >> i think it's bearish, and it's bearish from a contrarian standpoint so to kind of get back on this drum beat of the complacency and kind of the overdone enthusiasm. a couple of the things we've seen, a big rise in margin debt. that's the highest it's been post-crisis. we've seen hedge funds at their net longs, two-year high there, and as you say the etf flows showing really strong level of bullishness from investors that i think is getting excessive, going to be a contrarian bearish indicator. for the short term, agree with a lot of what vadeem said.
3:06 pm
out on the streets going to some 2013 outlook conferences with media, and the two things that i heard over and over were real estate, wall street making a big bet on real estate. i like it, i think it's a good bet, and also the multi-nationals. like what's happening as far as the materials stocks go. look at that for a good entry point as i do think we go into a period of consolidation. >> those dividend payers are certainly breathing a sigh of relief given where the law ended up on that fiscal cliff deal. let me ask you, bill. small caps versus large caps. do you need the large caps to go up in order for the small caps that you own to follow suit, or do you think the small caps can do well regardless? >> i think small caps will do well regardless. i do think, you think about the big themes for 2013 that we expect to do well. talking about the industrials. hopefully tech getting better. these are areas where the big companies may be hard to get bigger but for the small companies they can do extremely
3:07 pm
well. one other point that was earningsed earlier about ipos. there is supply demand and balance here. as money comes back from bonds and other areas into the equity market, there isn't as much paper out there to buy, so there's going to be demand, and i think that would be positive, and then lastly the m & a cycle. talked very little m & a activity last year. i think it will pick up 2013 which will clearly benefit small cap. >> the weakest year so far has been the highest first week for m & a ever in the global economy. >> if m & a picks up -- not like m & a had a bad year in 2012. it wasn't, you know, stellar, but if m & a, vadeem, can pick up a little bit more, that can be one of the positive cat lifts leading into the end to the middle of the year. >> it's one of the most significant indicators looking for value to the economic side of the economy. just as a fun fact, the number
3:08 pm
of attractive lbo candidates in the market today is the highest since 1975 which was the advent of the high-yield bonds, so the opportunity's clearly there. if we see capital commitment, that's a huge positive for the market. >> in terms of longer term, we've got this earnings period that seems to be a challenge according to many but longer term you say it will continue to find a home in stocks? >> well, one of the key controversies of the market, the most base care scenario is that the profit margins will decline. we don't believe that's the case outside of a few industries that have been very aggressive capital spenders, so if you stay outside of the industries that have been slow aggressively invested in capital, i think margins can sustain which means stocks are cheap. >> yeah. >> goldman sachs was a no doubt this morning that kind of reflected a lot of what i think is the first quarter is going to be rough, and because of things that we talked about before with the debt ceiling negotiations and the sequestration cuts and
3:09 pm
also a bumping earnings season, alcoa is nothing to brag about, and then we get through that and go through the end of the year and i think gains are backloaded. that was goldman's position. >> makes sense. what's your take on the third quarter, typically good because you've got the holiday spending but certainly a different kind of quarter with the dysfunction and the fiscal cliff and the uncertainty over the economy? >> when we saw the third quarter be reported, we saw a huge buildup of inventory in almost every region of the world. everything ranging from commodities, to industrial equipment, to autos so fourth quarter, some of that inventory got worked through, but it probably has kept the profits down, maybe the margins are not going to be able to recover as quickly, and i think that's creating a little bit of risk to the current quarter. >> all right. gentlemen, thanks very much. great conversation. appreciate your time. let's get to bob pisani who has been following the market all
3:10 pm
day. bob, what are you seeing right here? >> we're up but only half as much as we were in the dow industrial as an hour ago. want to show you a few industries on the up-and-down side. danaher, a big company, works across many industries. many companies raised their revenue guidance last night helping a lot of companies like united technologies and rockwell. remember, alcoa was very bullish on china. that may be helping them as well. the disc drive companies are all to the upside and seagate came out and unexpectedly raised their revenue guidance. that's helping all the companies. the two sectors on the downside are the bank stocks as well as some of the energy names. remember, banks usually sell off, maria, after the earnings season starts, not as we're going into it. that's a little bit unusual. keep an eye on that. nat gas stocks on the downside, nat gas on a multi-month low. maria, back to you. >> breaking news right now. let's get to herb greenberg on herbalife. >> reporter: a multitude of new angles on this story on herbalife, this just crossing. dow jones reporting that the
3:11 pm
securities and exchange commission has opened an inquiry into herbalife. that doesn't mean anything is necessarily going to occur, but it's an inquiry in the company. the stock on this news is down. last i checked it's down 4%, still coming down, as are other companies in the group. i want to point one thing out here, and a lot of times we talk about the federal trade commission. people ferg that the s.e.c. itself can and has in the past probed multi-level marketing companies. maria, back to you. >> herb, thank you. >> amazing timing that this happens on the same day that we find out that dan lobe takes a long position against bill ackman's short position, so you have this clash of the titans in the hedge fund world, and now the s.e.c. staff opens a probe into herbalife. >> what do you think about this? i mean, you've got these two guys on totally different ends in terms of herbalife? >> i think -- >> i know you've covered it so much. >> it's just interesting in that they have, i guess -- look, i don't know that they have worked together in the past or what their relationship personally, is but they have both come out on such on the sit sides of the
3:12 pm
spectrum and publicly so. the fact that dan lobe released a letter today saying that the nothing of bill ackman's claim that herbalife is a pyramid scheme, has no merit. he used words like preposterous when describing some of the theories that bill ackman had in putting on his short position. it's rare that you have two hedge fund guys as big as these guys are. >> right. >> go public. >> yeah. >> against each other with a fight on either side of the issue. >> really interesting story. >> yeah. >> i'll take a short break. >> all right. we do have 15 minutes before the closing bell. take a look at where the dow currently sits, up plus 35 and the s&p and nasdaq are in the green as well, just clinging on to slight gains. >> interesting developments in washington. just as the debt ceiling fight is heateding up, we're getting a new treasury secretary. tomorrow president obama expected to nominate white house chief of staff jack lew to replace tim geithner. will that a make a deal on the debt easier or tougher?
3:13 pm
>> and constellation brands raising its estimates. the stock is one of the s&p's top performers of the year. not getting much of a bood boost at all though. will this push the adult beverage company even higher? don't miss our exclusive with the company's ceo, rob sands. that's coming up. >> and aig's board declining to join a controversial shareholder lawsuit against the government over the $1 will 2 billion bailout of the company. i'll get the inside story from the ceo of the company, bob benmosche joining me here exclusively in the 4:00 hour of the "closing bell." back in a moment. curb... make you a target for thieves? or that dog bites account for a third of all home liability claims? what if you didn't know that one in seven drivers is uninsured? and that grease fires have to be smothered? the more you know, the better you can plan for whats ahead. get smarter about your insurance.
3:14 pm
♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ [ male announcer ] staples is the number-one office superstore ink retailer in america. now get $6 back in staples rewards for every ink cartridge you recycle when you spend $50 on hp ink. staples. that was easy.
3:15 pm
3:16 pm
welcome back. president obama expected to nominate his chief of staff, jack lew, to replace treasury secretary timothy geithner. that's expected tomorrow. it's a big move at a time when the white house is about to enter a showdown with congress over raising the country's debt ceiling, so how does tim pact that battle with lew substituting for geithner as the main player? >> steve liesman and rick santelli tell us what they think it all means. steve, you first. you recently did, as you know that great interview with tim geithner right here on the "closing bell." how well do you know lew? >> not as well. he was at omb for a brief time, a couple years in this administration, his second
3:17 pm
go-round there. look, we're learning more about him, and i don't think there's very much mystery here. he would be picked for the job because he's a budget expert, and that also he's a loyalist inside the obama administration and in a place that values loyalty like a lot of white houses, and the question becomes does he have other critical qualifications that say wall street or the international banking and financial system would require, with the big question being, you know, if we were at a place where there was another financial crisis, how well would jack lew, as did robert ruben, hank paulsen and tim geithner do to instill confidence? >> steve, you were right on the money with the jack lew prediction. you and i had this conversation, but i just wonder, you know, there's this antagonistic relationship between the white house and business. >> right. >> there were a handful of business guys in the mix that wanted the job. larry fink. would it be sort of better as a perception from the market or
3:18 pm
perception of business to put a business guy in there to help the relationship, help the togetherness of business in washington so we actually get some job creation going? what's your take on this choice? >> i don't disagree with the signal that could have been sent had somebody else been chosen. >> exactly. >> no doubt about that. it could have been an olive branch to the business community. i think that's for sure, and president obama did have several candidates who he could have chosen from in that regard. >> right. >> so i think that's very important, but i think right now president obama says, you know what? i've got a problem with congress. i've got a problem with the debt ceiling. let me pick a guy who almost all sides agree is one of the foremost experts when it comes to the budget. >> rick, what do you think? jump in here. >> well, you know, carlton college, harvard, '73 and a to tip o'neill, a former lifer bureaucrat here. instead of someone like a jamie dimon, and i think steve is absolutely right. i don't think there's a human being on the planet who knows the current budget and its
3:19 pm
issues better than jack lew which is exactly the reason i would say he's absolutely not my first choice for the job or the fifth guy in line to be president should anything happen to the other four because i think he's going to have a parental relationship, so to speak, with the budget and its process in trying to change it, and i think that that paternal instinct is going to be defending it versus, you know, actually trying to make a difference. looking at the budget even though we technically haven't had one. we've had continuing resolutions. i think we need someone that will look at frankenstein monster called the budget and not stick up for it but pick it apart. >> rick, you know, i don't think anybody in their right mind would argue for a second that a guy like jamie dimon wouldn't be the right, the qualified, the good message-sending pick. >> i don't think jamie dimon would take the job, by the way. >> james owe dimon would last about three days in that job. >> but it would be a pick nonetheless --
3:20 pm
>> i think everybody underneath him would last three days, that's what i think. >> possibly, possibly. >> my point in asking the question is certainly that would be cheered in places like where maria and i are sitting right now here at new york stock exchange, but on the flip side that are those who would say president bush 43, you know, not like paul o'neill or john snow were exactly greeted as the greatest treasury secretaries. >> they weren't. >> in the history of the country. >> hank paulsen dealt with some serious issues. >> i want to underscore that, there is this notion that somehow if you put an executive in a government job it will be much better. >> that's my point. >> i think that's a great point. william daly didn't do terrific there. there are guys who are good at government because they need to be good at government. that does not counter what rick is talking about that we need fresh brains, fresh ideas, fresh personalities. all of that is true. just to point out that a lot of executives have come into government and not prospered. >> that's in no way to disparage
3:21 pm
either of those gentlemen at all, it's just that there are many people on many sides that say that doesn't automatically qualify you to be an acceptable and well-performing treasury secretary. >> seriously, if we look at the litany of treasury secretaries over the last 25 years, really the job is kind of being a cheerleader for the president. i'm sorry if that sounds crass or not. >> absolutely. >> and that's not what we need, and i guess it's unfortunate that i'm just naive to the ways of politics, that somebody that could actually make a difference should be in there versus a cheerleader at a time we need another yes man like we need another trillion in debt. >> scott, i want to add anecdotally. >> you're right, rick. >> the number of business people in government that i have spoken to after about ten days that asked me for a gun so they could blow their brains out, after spending a week trying to deal with how government gets things done so that's one thing. i agree with rick and i agree with you on this. first of all, i think jack lew is probably going to grow into the job. he's got a lot of supporters. i will point out john boehner
3:22 pm
was concerned or has pointed out in bob woodward's book that jack lew was mr. no so maybe there's a bit of a subtle signal here to congress when the president says i'm not negotiating with congress when it comes to the debt ceiling, well, i'm putting in the guy you didn't want to negotiate with. >> exactly, and that goes to the op-ed by moore on monday that the president doesn't believe there's a spending issue at all and this hand-picked selection probably has similar views. >> oh, boy. already. put your seat belts on and get ready for a rough ride again. thanks, guys. we'll keep digesting this and watching the news. scotty? >> let's check in with seema modi to find out what's moving at the nasdaq today. >> have to start with facebook. shares continue to stage a strong comeback, stocks hitting 30 bucks a share, first time since july of 2012. a lot of anticipation about what facebook will announce at its mystery press event next tuesday. traders seem to be buying into the stock ahead of that event. another space that we'll continue to watch, biotech.
3:23 pm
a lot of bullish commentary out of that jpmorgan health care conference. that's helping the nasdaq biotech index outperform the nasdaq composite. some of today's winners including regeneron and celgene and there's one name not joining in on the biotech rally and that's idenix pharmaceutical saying they need more time to review its experimental hepatitis "c" drug. it now expects an fda response in the first quarter of 2014. that news weighing on shares by about 5%. >> thanks so much. in the final stretch. 35 minutes before the closing bell sounds for the day. a market that is higher off of the best levels but still showing a gain of 40 points on the industrial average. >> walmart is weighing in on the gun debate and heading to the white house and the nation's largest gun seller tried to avoid that more on that next. >> beer prices up and so is constellation stock. we'll find out how their
3:24 pm
acquisition of modello is going and why he's so optimistic about 2013. >> can you believe the iphone was introduced five years ago today? that's right. can you remember your whole life without that? maria, can you? >> no, i can't even believe it. i just don't remember. >> that product alone makes more than what technology, here's a hint, not a small one. tweet us your guesses at cnbc/closingbell. we'll be right back. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card
3:25 pm
at ♪ ♪ ♪ [ male announcer ] some day, your life will flash before your eyes. ♪ make it worth watching. ♪ the new 2013 lexus ls. an entirely new pursuit.
3:26 pm
3:27 pm
welcome back. i want to show you shares of herbalife, and what a volatile day it has been for hlf. the stock is currently up 3%. the big news today, really on two fronts. dan lobe of third point, big hedge fund guy coming out and taking a long position and saying that the accusations made by bill ackman who launched a very public short position against the company has no merit, that ackman's claim that the company is a pyramid scheme, on top of that within the last hour we learned that the s.e.c. has opened an inquiry into herbalife. we'll have much more on this story. herb greenberg has been all over it. we'll hear from him a little bit later. meantime, walmart, the nation's largest gun retailer heading to washington to meet with the vice president about gun control, but only after some reluctance. our eamon javers is in d.c. with the very latest. why the turnaround? >> hi, scott.
3:28 pm
let me bring you up to date on what happened so far today. there was an emotional meeting at the white house today led by vice president joe biden as victims of gun assaults and leaders of the brady campaign on gun violence met with the vice president at the white house to lay out what they think ought to happen here. the vice president saying that he thinks that the administration is going to move very quickly in the wake of the newtown school shooting. take a listen. >> every once in a while there's something that awakens the conscience of a country, and that tragic event did it in a way like nothing i've seen in my career. so we're here today with you as it requires immediate reaction. >> that's the emotional backdrop. the nra is going to the white house, as will walmart which is the largest if not the largest gun vendors in the country. walmart, there was some confusion, maria, about whether or not they were going to attend the meeting. they put out this statement today saying knowing our senior
3:29 pm
leaders could not be in washington this week, we spoke in advance with the vice president's office to share our perspective. we underestimated the expectation to attend the meeting on thursday in person, so we are sending an appropriate representative to participate. maria, it appears that walmart will now be attending this meeting at the white house, but it's against this very tough emotional backdrop that they will have to make whatever arguments they are going to make about gun sales in this country, maria. >> really interesting stuff. thanks, eamon. putting the controversy aside. should you buy walmart stock here? let's start talking money over the fundamentals and technical. j.c. o'hara and zachary carabela. j.c., what does the chart of walmart look like you to? >> i don't like the charts, another 10%, to 11% downside risk before it looks attractive.
3:30 pm
what's the technical story? well, if you look at a longer term chart of walmart it's a blue chip megacap stock that's slow moving, and then comes 2012 and all of a sudden the stock price rallied up to 75. and this is one of those examples of a stock that moved too far too fast. the larger the pop, the farther the drop, and right now with the rounding top running out of gas at 75, i'm looking at 62 on my chart as a downside level before walmart begins to lock attractive to me. >> j.c., you're a seller. zach, what do you say? >> a $6 drop on a $6 tock, maybe it's 10, maybe it's 9 or 11. from my perspective it could fall 10%, so the question is you can't own anything in every portfolio so you've got to own some things. i don't think walmart is ever going to hurt anyone. the question with walmart is how much will it benefit you regarding others and a lot of trends in wall mort's favor. one is a somewhat stabilizing
3:31 pm
u.s. economy which, you know, tends to -- walmart is a bellwether of. the other is a strong or increasely stronger mexican economy which we certainly knew the downside of walmart's exposure to walmart during the whole crisis last year so i'm not a great fan of walmart because i would rather get more possible, but i think if you're worried about the drop, walmart is rarely going to hurt you. >> zachary, let me jump in here, and you did say you can't own everything. i will say this. technically when 85% of the s&p are above their 50-day moving average i want to make surety stocks i own are above the 50-day moving average and right now walmart is no. take a look at target. direct competitor to walmart. look at that chart. you saw what they said about the risk with amazon and the low-cost pricing that they are going to be trying to compete with amazon. look at that chart compared to walmart. both look the same, very tone and downside risk outweighs upside potential here. >> on the target walmart thinking, target is more
3:32 pm
specialized, somewhat more volatile name and idea. walmart to me is more like owning a staple in a space that will continue to have decent business trends. >> all right, guys. we'll leave it there. we'll watch this story. it's a good one. zach, j.c., scott, over to you. >> dow holding on to a gain of 45 point and the s&p sitting 1460. half an hour to go before we ring the ball on wall street. and after this short break constellation's ceo is here to tell us what drove his strong earnings and how rates are lower boosting the bottom line and all eyes, as you know, are on the financials. our experts will help you get ready for the deluge of bank results coming your way. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime.
3:33 pm
tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, tdd#: 1-800-345-2550 and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-866-294-5412. [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it. nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground
3:34 pm
and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
3:35 pm
well, if are a fun of robert mundavi and corona beer, probably a constellation fan. probably even a bigger fan if you're a shareholder. the company reporting a 5% impact and constellation is also the number one best performer in the s&p 500 over the last year. very nice chart despite the weakness we're seeing today. talk pentagon a return of nearly 80% despite being under the
3:36 pm
slight pressure today. >> ceo rob sands joins us now exclusively. rob, it would seem to be a good earnings report, yet the stock is lower. i'm wondering if that is because the street didn't like the comments it heard about alcohol sales or demand slowing late into 2012 as related to the fiscal cliff. i don't know about you. i was drinking more as a result of all of that going on in washington. >> yeah, well, it's not surprising. yeah, i think that perhaps that comment had some impact. you know, nevertheless i would say that beverage and alcohol sales were pretty robust even though the growth rate slowed in the fourth quarter and even due to fiscal cliff woes but generally the -- the business is good. there's a lot of trading up in all three categories so -- and our business was -- was fairly good during the holiday season as well, so generally we're pleased.
3:37 pm
>> what are you expecting 2013? a lot of uncertainties out there. what is the biggest driver of the business, and what kind of an expectation do you have? >> yeah. we're looking for some good growth 2013. you know, we've got a lot of momentum behind our brands. they are performing really well. you know, the beverage and alcohol business is not very cyclical or not really very sensitive to the economy in general. so we expect our momentum to continue well 2013. >> wait a minute. you just said the beverage business isn't going to move related to what's happening in the economy, but then you said that the fiscal cliff negatively impact what had was going on. how do those two things jive? >> yeah, i think that in the very short term, as it relate specifically to the holiday, you know, retail in general, people were just not out and about as much, but, you know, over longer cycles, over, you know, longer period, 12 months, you know, the economy really just doesn't have
3:38 pm
that big of an impact on the business. now, you know, the fiscal cliff was more than the economy. it was a very specific set of circumstances at a very specific point in time so i won't say that, you know, the industry is completely immune to those kinds of things but they can nevertheless -- nevertheless it is pretty resistant to economic woes. >> so does the growth at constellation come from organic business, or do you think it comes from acquisitions in the coming year. i know you're in the middle of the modelo acquisition and acquiring half of crown is this going to close in this quarter? where are you on acquisitions, and how does that play into the quart story? >> first of all, if you look at the current quarter. our sales grew about 9%, and in our organic basis it was about 6%, so we did have an acquisition of a brand called mark west which is the number
3:39 pm
one pinot noir brand but our growth is very good and very robust on an organic basis, and then as we move into 2013 we expect to have, as i said, continued good growth organically, and with the crown deal we'll have significant acretion to the top line and bottom line related to that. the answer is both, and, yes, we expect the crown deal to close in the first quarter of 2013, as i said today earlier. >> what can you tell the street about your margins? there seems to be some concern from some of the research firms on wall street about the beer margins being pressured. what do you say to that? >> no, we don't expect to have any issue with our beer margins. they should be -- they should remain, you know, fairly constant, and on the wayne side our margins were up this quarter
3:40 pm
due to a positive mix shift in the business, meaning we were selling more -- higher margin, more premium products, and i would expect that trend to continue as well. >> well, there were those who were saying you were doing that though because were you spending a lot more on the marketing, promotions and incentives and things like that. is that fair? >> in which -- which business, beer or wine? >> beer and wine. >> yeah, in a. i would say that, you know, our mar jib improvement is strictly due to mix shift meaning selling higher margin better products. our spending has been fairly consistent. it was a bit higher on promo in the third quarter, and it should be even in the fourth quarter with what we spent last year, and, you know, our market the spends and promo on the beer side have been fairly consistent as well. >> all right. we'll leave it there. >> so good to have you on the program.
3:41 pm
>> thanks for having me. >> see you soon. >> the housing market doing better but the renting market is bigger than ever and being taken over by a large-scale investor group buying thousands of properties. how do they manage them them all? diana olick in douglasville, georgia, with that story. over to you, diana. >> reporter: that's right, maria. i mean, in the old rental model you had mom and pop types. they would own maybe one or two rental properties to get a little extra cash flow, but as you said big-money investors are now jumping in to buy thousands of homes just like this one, a you've got to wonder how are they going to manage them. i mean, even warren buffett said he would get in if he could figure that part out because it's not like one big apartment building where there's one place fixing everything. in the new rental game who do you call when the faucet is dripping? >> we have people working in the field so we have people working in specific geographic areas, and a lot of them live in our own homes, so if you need repair and maintenance and you're in a certain area, atlanta is very
3:42 pm
geographically hamasive. it's like a mini l.a. you're going to have -- you're going to have the people there. you're not working out of this office. >> at the new american home there's close to 200 employees covering 2,000 homes in georgia, north carolina and florida, from inspecting and rehabbing foreclosures, to marketing them, to, yeah, dealing with whatever toil set overflowing or oven isn't heating. now, they rely on technology to cover it all. >> we use our ipads to complete our reports of a final walk to come in and give the contractor a list of items that they need to do to complete the home to get it ready for a future tenant to move in there. i drive anywhere from 100 to 200 miles a day on a typical day and lock at anywhere from 8 to 15 houses a day. >> reporter: at the mesh home they want to keep all of the management of these homes inhouse because then they can
3:43 pm
keep an eye on everybody, and they can keep all of that technology together. the question is going forward, can they do that on a large geographic scale. they say they can and the more homes they have the more people working for them and the better that will be. they will start a new web portal so that the renters can go online to the own account, pay their rent and, of course, make all their complaints when something is not working. maria? >> thanks very much. we will follow that. 20 minutes until the closing bell sounds for the day, a market that's higher but off the highs of the session. >> at bell, aig announced it won't sue the u.s. government after the huge bailout the company received. ceo bob benmosche is going to be here exclusively to tell you why. then, the boeing dreamliner turning into a nightmare for the company as the safety issues keep piling up. an aviation safety expert is here to discuss if we're putting too much technology in our planes. we're going to explain. i don't spend money on gasoline. i am probably going to the gas station
3:44 pm
about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪ i had enough of feeling embarrassed about my skin. [ designer ] enough of just covering up
3:45 pm
my moderate to severe plaque psoriasis. i decided enough is enough. ♪ [ spa lady ] i started enbrel. it's clinically proven to provide clearer skin. [ rv guy ] enbrel may not work for everyone -- and may not clear you completely, but for many, it gets skin clearer fast, within 2 months, and keeps it clearer through 6 months. [ male announcer ] enbrel may lower your ability to fight infections. serious, sometimes fatal events, including infections, tuberculosis, lymphoma, other cancers, nervous system and blood disorders, and allergic reactions have occurred. before starting enbrel, your doctor should test you for tuberculosis and discuss whether you've been to a region where certain fungal infections are common. you should not start enbrel if you have an infection like the flu. tell your doctor if you're prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure, or if you have symptoms such as persistent fever, bruising, bleeding, or paleness. if you've had enough, ask your dermatologist about enbrel. [ male announcer ] how could a luminous protein in jellyfish,
3:46 pm
impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. welcome back. earnings season kicking into high gear this week. alcoa on the show yesterday and next week a big prayed of more than 70 reports for the first quarter. how do you prepare as some of these earnings could be big
3:47 pm
market-movers? >> let's ask our guests. bob pisani is joining the conversation as well. kate, to you first. how do you see the market, right? we had this run. a couple days of a pullback and now we have what you could categorize at modest gains. >> we're very bullish on equities for 2013. came out with our yore-ahead outlook and said relative to other asset classes equities are in great shape, valuations are a stretch and corporate balance sheets the best in 30 years. >> you but corporate earnings may not be a barn burner. >> may not knock anyone's socks off as we get through the next couple of weeks and that may be why people take profits and sit back and assess the landscape. >> bob pisani, what do you think people are expecting from the fourth quarter? >> look, once again, the very familiar pattern here. lowered the expectations. analysts taken the numbers down. no doubt that two-thirds of the companies will beat expectations as they do quarter after
3:48 pm
quarter. i'll tell you the "x" factor right now, maria. now that parts of the fiscal cliff have been resolved, are companies going to be any more or less cautious? for example, capital expenditures. do they see things worst investing in at this point. how much of it -- of the capital cliff being resolved do they think is going to make a difference now for their investment? >> it's a great point. my instinct tells me that they are still in lockdown mode, andreas. i know that you're bullish, but give me this sense of what you're seeing in terms of are they going to put money to work? >> i mean, i think they will. >> as a percentage of gdp, historic high at 10% and that business expenditure is an historic low for this part of the psych. something is going to give and we think ultimately the fiscal cliff will be resolved. the housing market is on the mend. >> how do you allocate capital then? you're expecting a good stock market this year, and you're bullish on the economy. how do you want to allocate
3:49 pm
money then? >> long equities. we've said that emerging market equities would do well in 2012 and in 2013 that will continue. valuation on many european markets are still very reasonable, particularly in the peripherals and in recent days they have shown good performance and also there's money to be made on some of the emerging market debt. >> we've heard a lot about, from many of the guests who have been on over the last several days, early year choppiness and then you can settle in and do something once the debt ceiling debate is figured out and get some of the issues out of the way. >> we've lived in this environment for the last 18 months, one big disaster after another. everyone is waiting for the policy response, comes at the 11th hour and 59th minute. this is a pattern everyone has gotten used to but the fiscal cliff and the debt ceiling are the last big tail risks we think of the tail risks that we have to worry about, saw we would say once we get past that over the next several months we think it will lift a little bit of a cloud and investors will take
3:50 pm
risks. >> good to see you. >> good to see you. >> thanks so much for joining us. >> bob, thanks to you as well. ten minutes to go before we close it up. the dow jones industrial average holding on to a gain of 50 points. >> well, this herbalife soap opera is continuing. herb greenberg is coming up. all over the big move in the stock. take a look. up 3.25% right now. we'll show you what's behind it. >> and can you believe the iphone was only introduced five years ago? it is true. five years ago today, in fact, so here's a trivia question for you. the iphone alone is worth more money than what whole tech company combined? tweet us your guesses at cnbc/closing bell. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak.
3:51 pm
surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at
3:52 pm
3:53 pm
lots of action at herbalife. our own herb greenberg has been over the story for months now and the s.e.c. looking into things. >> that's the latest. dow jones reporting that the s.e.c. has opened an inquiry into herbal life. the broader controversy and the multi-level marketing industry boils down to this. do participants make more money from recruiting others than
3:54 pm
selling product? now, during our ten-month investigation into the industry we interviewed many current and former distributors including sharon shea who lost $15,000 in three months after signing up to sell herbalife. so you basically sign these people up. this is great. now you're signing people up. you're getting a cut of their business. you must be off and running, and you must be -- >> oh, i've got checks coming in daily. no, not happening. >> but you have these downline people. you must be getting money kicked up to you upline now. >> well, they are having the same problem i was. signing people up. you don't make money from selling products. you make a little, not much. not enough to pay the bills that are racking up. you make money from signing people up. >> reporter: and former distributor dan fallow who claims at one point so to-to-have been one of the biggest distributors of herbalife in the world tell
3:55 pm
people how people stuff garages full of product. >> call it garage qualified. they would stack as much product as they can in their garage and at some point they would realize that they have to quit. >> wait a minute, garage qualified? >> yes. >> you knew this was going on? >> it's common. >> so people buy product more than they -- more than they can sell. it sits in a garage. what happens. there's got to be an end point here at some point. >> when they run out of money there's an end point. >> what is garage qualified? you smile. >> that's an interesting statement because that follows this industry around that people are loading their garages full of product, using it to qualify for trips or the next level. we don't see that today. we see our orders much more streamlined. muff smoother. we see retail activity. >> and a reminder there will be much more from michael johnson. he's ceo of herbal life tomorrow. the company is holding its
3:56 pm
annual response to respond to critics. >> that's going to be a great analyst meeting. >> absolutely. given all the news we've got today. and can you see, of course, see herb's full report on multi-level marketing and herbalife including the documentaries. do not want to miss "selling the dream." >> got the closing bell in five minutes. got a market that's moving higher getting some momentum as we approach the close. balances up 55 point on the dow jones industrial average. we'll be back and see how the average ends the day. high or low. stick your neck out for us, scotty is this. >> given the fact that we're up 55. i'm going higher. >> i'm with you. >> i'm going higher. >> back with the closing countdown.
3:57 pm
3:58 pm
3:59 pm
welcome back to the floor of the new york stock exchange. it's time now for the closing countdown and here has got to be the stock of the day, right? herbali herbalife, the stock up 3.4%. dan lobe, the hedge fund guy is taking a long position against bill ackman. juicy story. all ahead of the analyst day tomorrow. s.e.c. meantime today opening up a probe into herbalife. all makes for some juicy stuff.


info Stream Only

Uploaded by TV Archive on